Grants to individuals for travel, study, or other similar purposes (including loans made for charitable purposes, and program-related investments) are taxable expenditures, unless the following conditions are met:
- The grant is awarded on an objective and nondiscriminatory basis under a procedure approved in advance by the Service, and
- It is shown to the satisfaction of the Service that one of the following requirements is met--
a. The grant is a scholarship or fellowship and is to be used for study at an educational institution that normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where the educational activities are carried on. For these purposes, grant recipients need not be limited to degree candidates, nor must the grant be limited to tuition, fees, and course-required books, supplies and equipment. A recipient may use grant funds for room, board, travel, research, clerical help or equipment, that are incidental to the purposes of the scholarship or fellowship grant.
b. The grant qualifies as a prize or award that is excludible from gross income under Internal Revenue Code section 74(b), if the recipient is selected from the general public. For this purpose, the recipient may keep the prize or award, and need not authorize the foundation to transfer the prize or award to a governmental unit or to another charity.
c. The grant's purpose is to achieve a specific objective, produce a report or similar product, or improve or enhance a literary, artistic, musical, scientific, teaching, or similar capacity, skill or talent of the grantee.
- Company scholarship programs
- Educational loans
- Certain designated grants
- Grants to governmental agencies
- Renewals of grants
- Certain grants to public charities not treated as grants to individuals